This is an interesting, long article written for the Harvard Business Review discussing the future of ultrasound and how GE is "disrupting itself". Its initial focus discusses the success of "reverse innovation" in ultrasound. Its a somewhat ironic situation in which equipment designed to meet the needs of less-developed countries with less resources, are being introduced to the larger, more well-to-do countries for entry in the market place. And they're finding success. ie: Their emerging markets find places in our emerging markets, but a tad bit differently.
In the first paragraph, it discusses two ultrasounds that refer to its recently released GE Venue 40 Ultrasound Machine series. The Venue series of ultrasounds are direct competitors to the SonoSite S-series ultrasounds, but apparently at a much more competitive price point. They're singular-focus ultrasounds designed to be used as a tool to assist another procedure, and largely designed for physician-use. For GE, these include: Vascular Access, Anesthesia, Interventional, Musculoskeletal, and Point of Care ultrasounds. Frankly, when I do apps training on these types of limited-use portables, I don't like them as much. Sure, they are easy to use, but they're hard to optimize and, oddly, frustrating to some. I prefer the Siemens P50 because they're more versatile and you can use a wireless mouse. I find that many physicians choose the SonoSite systems simply because its all that they've seen (ie: great marketing on SonoSite's behalf). Don't get me wrong, I really like SonoSite ultrasound machines, but each has its place. Venue 40 ultrasound Product Brochure and information found here.
But I digress. Here's the article. It's important to note that all of the authors are on GE's payroll, including Jeffrey Immelt, CEO of GE Healthcare. Its other authors are Vijay Govindarajan, and Chris Trimble.
The remainder of the article is very interesting but less ultrasound-focused. It essentially discusses how GE will use innovation for less-developed countries as its model to compete in the worldwide market (note that these countries, such as rural India and China, are some of the largest emerging market in the world). It states that if GE does not innovate for these countries, the smaller "giants" of innovation will crush GE.
Quoted from http://hbr.harvardbusiness.org/2009/10/how-ge-is-disrupting-itself/ar/1:
How GE Is Disrupting Itself - HBR.org
In May 2009, General Electric announced that over the next six years it would spend $3billion to create at least 100 health-care innovations that would substantially lower costs, increase access, and improve quality. Two products it highlighted at the time—a $1,000 handheld electrocardiogram device and a portable, PC-based ultrasound machine that sells for as little as $15,000—are revolutionary, and not just because of their small size and low price. They’re also extraordinary because they originally were developed for markets in emerging economies (the ECG device for rural India and the ultrasound machine for rural China) and are now being sold in the United States, where they’re pioneering new uses for such machines.
We call the process used to develop the two machines and take them global reverse innovation, because it’s the opposite of the glocalization approach that many industrial-goods manufacturers based in rich countries have employed for decades. With glocalization, companies develop great products at home and then distribute them worldwide, with some adaptations to local conditions. It allows multinationals to make the optimal trade-off between the global scale so crucial to minimizing costs and the local customization required to maximize market share. Glocalization worked fine in an era when rich countries accounted for the vast majority of the market and other countries didn’t offer much opportunity. But those days are over—thanks to the rapid development of populous countries like China and India and the slowing growth of wealthy nations.
We call the process used to develop the two machines and take them global reverse innovation, because it’s the opposite of the glocalization approach that many industrial-goods manufacturers based in rich countries have employed for decades. With glocalization, companies develop great products at home and then distribute them worldwide, with some adaptations to local conditions. It allows multinationals to make the optimal trade-off between the global scale so crucial to minimizing costs and the local customization required to maximize market share. Glocalization worked fine in an era when rich countries accounted for the vast majority of the market and other countries didn’t offer much opportunity. But those days are over—thanks to the rapid development of populous countries like China and India and the slowing growth of wealthy nations.
GE badly needs innovations like the low-cost ECG and ultrasound machines, not only to expand beyond high-end segments in places like China and India but also to preempt local companies in those countries—the emerging giants—from creating similar products and then using them to disrupt GE in rich countries. To put it bluntly: If GE’s businesses are to survive and prosper in the next decade, they must become as adept at reverse innovation as they are at glocalization. Success in developing countries is a prerequisite for continued vitality in developed ones.
The problem is that there are deep conflicts between glocalization and reverse innovation. And the company can’t simply replace the first with the second, because glocalization will continue to dominate strategy for the foreseeable future. The two models need to do more than coexist; they need to cooperate. This is a heck of a lot easier said than done since the centralized, product-focused structures and practices that have made multinationals so successful at glocalization actually get in the way of reverse innovation, which requires a decentralized, local-market focus.
Almost all the people and resources dedicated to reverse innovation efforts must be based and managed in the local market. These local growth teams need to have P&L responsibility; the power to decide which products to develop for their markets and how to make, sell, and service them; and the right to draw from the company’s global resources. Once products have proven themselves in emerging markets, they must be taken global, which may involve pioneering radically new applications, establishing lower price points, and even using the innovations to cannibalize higher-margin products in rich countries. All of those approaches are antithetical to the glocalization model. This article aims to share what GE has learned in trying to overcome that conflict.
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